Jefferies Credit Partners is raising approximately €1 billion for a dedicated private credit secondaries fund, entering a market that has quietly expanded as primary lending windows narrow. The fund will target loan acquisitions from existing holders and selective new origination as secondary pricing dislocates from par.
The raise comes as private credit secondary transaction volume reached $18.7 billion in 2024, up 43% year-over-year, according to Jefferies' own desk data. The firm is building capacity to purchase performing and sub-performing loans from funds facing redemption pressure or portfolio rebalancing needs. The structure allows dual deployment: outright loan purchases at discounts to par and direct lending into situations where borrowers seek refinancing outside traditional syndication channels. Jefferies has not disclosed the fund's expected first close date but is circulating materials to European and Middle Eastern family offices with existing credit allocations.
The timing reflects two converging pressures. First, the $1.7 trillion private credit market is encountering its first sustained redemption cycle since 2020, with net outflows from direct lending funds reaching $8.2 billion in Q4 2024. Managers holding illiquid loan books are exploring secondary sales to meet liquidity requests without triggering fire-sale pricing across portfolios. Second, primary direct lending spreads have compressed to SOFR + 425 basis points for sponsor-backed borrowers, down from SOFR + 550 in mid-2023, making secondary purchases at 75-85 cents on the dollar more attractive than new origination at tighter spreads. Jefferies is positioning to buy loans from managers who underwrote at wider spreads and now face mark-to-market pressure as refinancing risk rises into 2026 maturity walls.
The €1 billion target size is deliberate. It sits below the threshold requiring multi-year fundraising roadshows but above the scale needed to move pricing in secondary negotiations. Jefferies Credit Partners, the firm's dedicated credit private capital arm, has $4.3 billion in assets under management across opportunistic credit strategies. The secondaries fund will operate separately from Jefferies' balance sheet lending operations, avoiding conflicts when the investment bank advises on debt restructurings. The strategy assumes 15-20% of private credit loans originated between 2021 and 2023 will seek secondary exits by year-end 2026, either through managed sales or distressed workouts.
Allocators should watch the March 2025 BDC earnings cycle for commentary on portfolio liquidity and secondary inquiries. Jefferies has indicated the fund will begin deploying capital in Q2 2025, suggesting a first close is expected before June. The firm's ability to reach the €1 billion target without extending the raise timeline will signal whether institutional LPs view secondaries as a defensive allocation or an opportunistic overlay. The structure of disclosed purchases—whether Jefferies buys whole loans or participations—will reveal whether sellers are managing liquidity or exiting positions ahead of credit deterioration.
The fund is not a distressed vehicle. It is a bet that the next 18 months will produce $25-30 billion in secondary loan volume as managers reallocate and sponsors refinance outside traditional channels.